Northumbrian Water Group has reported a pre-tax profit for the first time in four years as dividends to its overseas owners have edged up.
The provider of water and sewage services to about 2.7m people across the North East and a further 2.1m across Essex and Suffolk saw revenue climb to £952.4m in the year to the end of March, up from £899.9m the year before. Newly filed accounts for the group show pre-tax profits of £6.1m for the period, in contrast to 2023's £49.7m pre-tax loss which followed losses stretching back to 2021.
Dividends paid to the group's Hong Kong-based owners, the £440m turnover CK Infrastructure group and New York private equity company KKR & Co, climbed to £108m for the year, up from £105m last year. In addition, a £37.4m final dividend was proposed.
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CEO Heidi Mottram said it had been a strong performance with many targets met, attracting a reward under regulator Ofwat’s 'outcomes regime'. She said the group was particularly focussed on affordability and particularly vulnerable customers - acknowledging that cost of living pressures had pushed more people into water poverty. There has been a 25% increase in customers receiving support with their bills.
The accounts cover a number of performance measures, including interruptions to water supply, which were reduced across the main part of the group - Northumbrian Water Limited (NWL) - though bosses were disappointed to have missed a "stretching target" for the year owing to problems with a significant main in Suffolk which impacted about 8,000 properties. There was also said to be progress in long-term efforts to improve drinking water quality but a target there was also missed, leading to a £2.7m penalty.
Meanwhile, pollution and discharge targets were also missed by NWL with the total number of pollution incidents at its highest level in eight years with power outages and failures at three of the firm's sewage treatment works identified as a particular issues. That prompted £3.85m of penalties. Meanwhile, leakages were reduced across the group's two regions with targets beaten in Suffolk and Essex but missed "by the narrowest of margins" in the North East.
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Despite "exceptionally high" rainfall during the year, three of four sewer flooding targets were met as bosses said they acknowledged public concern about the environmental impact of storm overflows. Pointing to 2023's very wet weather, the group said there had been a greater number of storm overflow spills reported across the industry than in the previous year and that its own £1bn of investment planned between 2025-2030 aimed to prevent spills.
In July, Ofwat issued its draft determination for the 2025-2030 period, allowing Northumbrian Water Group to raise bills from £415 to £460, excluding inflation, and invest £5.7bn - more than £2.2bn over its current permitted level. Within the accounts, bosses called that level "insufficient" given inflation and that it would likely invest £200m beyond that allowance, with the funds coming from shareholders.
The group estimates its North East investment during the five year period will add about £5.7bn to the regional economy. It said it believes in maximising the local impact of its spending but some of its projects cannot be undertaken by local contractors.